After the note in which the IMF communicated its analysis on El Salvador in which it suggested removing Bitcoin from the status of legal tender, an Italian MP commented in defense of the Central American country.
From Italy the defense of El Salvador and Bitcoin against the IMF
Davide Zanichelli, deputy of the 5 Star Movement and coordinator of the parliamentary intergroup cryptocurrencies and blockchain wanted to remind that El Salvador is a sovereign state. As reported by the newspaper Milano Finanza, he said:
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“El Salvador is a sovereign state and should be respected in the choice of its legal tender, be it the US dollar, physical gold, Bitcoin or Maldives shells”.
Diplomacy against El Salvador
This statement is almost unique as international chancelleries have always been very skeptical about the adoption of Bitcoin as legal tender by President Bukele.
For example, the Bank of England warned of the risks associated with volatility. The point is that an asset that tends to appreciate and depreciate with the rapidity of Bitcoin risks being unreliable for the coffers of the state and the citizens.
These are somewhat the same concerns expressed by the IMF. In its note, the International Monetary Fund analyzed the economic conditions of El Salvador after the pandemic. The country is among those that have suffered the least in terms of deaths and number of contagions, but the economy has still been affected. Nonetheless, El Salvador is in recovery. What worries the IMF is Bitcoin’s status as a legal tender due to the volatility of the cryptocurrency and the risks that may be connected to the financial system.
Other experts have pointed out that the choice of Bukele, also justified with the desire to reduce the cost of commissions of remittances, in reality does not hold up to the facts, because the costs of conversion of BTC depending on the exchange nullify the promised savings.
What’s more, the very loss of BTC’s price, which has halved since the November 2021 ATH, have meant that President Bukele’s investments are currently at a loss, despite his tendency to buy during the declines.
President Bukele remains convinced that his strategy is the right one, certain from the deflationary nature of Bitcoin and an imminent rise in value.
In his latest post, he wrote:
“There are more than 50 million millionaires in the world. Imagine when each one of them decides they should own at least ONE #Bitcoin but there will ever be only 21 million #Bitcoin. No enough for even half of them. A gigantic price increase is just a matter of time”.
It is precisely on the rise in the price of Bitcoin that the fate of El Salvador hangs. If BTC returns to grow, perhaps to new records, Bukele’s bet can be said to have been successful and then El Salvador will truly become a case destined to set the standard, otherwise a crypto winter would be a big problem for both the president and the Salvadorans.